BofA CEO defends decisions at annual meeting

By IBT Staff Reporter On 04/29/09 AT 2:40 PM

Bank of America Corp CEO Kenneth Lewis, facing a vote that could strip him of the chairmanship of the largest U.S. bank, defended his management decisions before thousands of shareholders at the bank's annual meeting on Wednesday.

Shareholders voted on a proposal to separate the posts of chairman and chief executive. The meeting ended after almost four hours without the vote results being announced. A bank spokesman said the results would be released later on Wednesday.

The spokesman, Robert Stickler, said the bank will appoint an independent chairman if a majority of shareholders want one.

Lewis, 62, heard complaints about the 75 percent fall in the bank's share price since the purchase of Merrill Lynch & Co on January 1, and the bank's failure to quickly disclose huge losses that Merrill was amassing even as it was paying out bonuses to employees.

Judy Koenick, an investor who said she lost $27,000 on the bank's stock and wore a shirt saying Fire them all!!! Kenneth Lewis, & the board of directors, make a clean sweep, told Lewis that he and other directors should have stood up to any government pressure to buy Merrill, even if it cost them their jobs.

I don't understand how a code of ethics allows you to say, 'My job is more important,' she said. You knew what was going on with Merrill Lynch, you kept it from us. You're still keeping it from us.

In a separate vote, shareholders elected all 18 director nominees, including Lewis, by a clear margin, a person familiar with the matter said.

Shareholders packed a theater in uptown Charlotte and questioned Lewis, who stood quietly at a podium on a stage, sometimes biting his lip.

In a speech, he defended buying Merrill, saying it was good value and that abandoning the deal would have caused serious harm to U.S. banks. He also said he saw no need for Bank of America to make further acquisitions.

Bank of America needed a $20 billion federal bailout to absorb Merrill, and Lewis has indicated that regulators pushed him to keep quiet about Merrill's losses and not to back out of the merger.

They should have disclosed it, said Ed Morais, a financial adviser and shareholder from Charlotte attending his first annual meeting. It seems like he chose to put Merrill Lynch shareholders ahead of Bank of America shareholders.

Citing shareholder lawsuits, Lewis declined to comment on the thornier issues of the acquisition, which is also the subject of investigations by members of the U.S. Congress and regulators, including the U.S. Securities and Exchange Commission and New York Attorney General Andrew Cuomo.

Bank of America has received a total of $45 billion in taxpayer funds and may need more after results of government stress tests are released, probably next week. The tests gauge banks' ability to weather a deep recession.

At the annual meeting, shareholders were anxious to know whether the bank would dilute their holdings by issuing more common stock. But Lewis declined to discuss details, saying the bank was talking to regulators.

Critics say Lewis often appears interested in making Bank of America bigger rather than better.

Lewis said the board's decision to buy Merrill was not about a selfish desire to keep our jobs.

I can state without reservation that these acquisitions are not mistakes to be regretted, he said.

He also said, We see no imperative in any market for this company to consider further acquisitions for the foreseeable future.

While the bank had a first-quarter profit of $4.25 billion, credit quality deteriorated, with losses soaring on credit cards and mortgages, and much of the profit came from one-time items and an accounting change. The results failed to quell criticism.

You've got to question whether this management team that grew this portfolio is the right group to clean up the mess, Jonathan Finger said in an interview on Wednesday. Finger and his father Jerry, who in 1996 sold his Charter Bancshares Inc of Houston to a Bank of America predecessor, campaigned against Lewis' re-election.

OPPONENTS

Among Lewis' opponents are several big pension funds, including the California Public Employees' Retirement System, which has said it would vote its 22.7 million shares against the bank's entire board, and the TIAA-CREF pension fund manager.

Three major shareholder advisory services opposed the re-election of Lewis and lead director O. Temple Sloan to the board.

Many corporate governance experts favor splitting the posts of chairman and CEO; last year, however, such a split was a precursor to the ouster of the chief executives of two large, troubled banks -- Ken Thompson at Wachovia Corp and Kerry Killinger at Washington Mutual Inc .

The bank's shares, which have fallen 78 percent in the last 12 months, rose on Wednesday amid a broad rally in financial stocks. The shares added 42 cents to $8.57 in afternoon trade on the New York Stock Exchange.

(Reporting by Jonathan Stempel; additional reporting by Elinor Comlay and Dan Wilchins; editing by John Wallace)